SOS! Will ECB withhold funds from Greece before post-referendum talks begin?

A continued freeze on funds would be tantamount to an expulsion from the Eurozone

A crucial 48 hours are ahead for Greece following the announcement of the Greek referendum results that saw 61% of the voters reject the tough bailout reforms submitted by Greece’s international creditors. Following the popular mandate, Prime Minister Alexis Tsipras will head to the European Council scheduled for Tuesday armed with the results of the referendum that he intends to use as a “tool of negotiation”.

The government begins a race against time in its fresh round of negotiation with creditors while feeling the pressure of economic asphyxiation, isolation from international transfers, huge lines at ATM machines and shortages of basic products.

Until late last night the Ministry of Finance would not confirm speculation concerning a meeting with the Euroworking Group via a teleconference call. Other sources point to State Minister Nikos Pappas and Alt. International Economic Relations Foreign Minister Euclid Tsakalotos being ready to leave for Brussels in the framework of reviving negotiations.

The European Central Bank is meeting at noon on Monday to discuss the referendum results.

The Bank of Greece said that they would make a formal request for fresh support. The ECB has to decide within hours whether to continue to freeze emergency liquidity assistance at the current cap of 89 billion euros.

The freeze on further ELA funds and capital controls resulting in the closure of banks a week ago caused problems for Greece ahead of the referendum on July 5. It was a show of strength to give Greeks a taste of what they would be in for when choosing debt relief over austerity.

To continue to withhold funds from the banks would be tantamount to a decision to expel Greece from the eurozone even before fresh rounds can begin. In that case, the Greek government would be forced to issue a new currency.

Stay tuned!